Block of flats insurance covers a building in shared ownership, which makes it unusual: the people who pay for it are rarely the people who arrange it, and the terms are set by a lease written long before anybody involved arrived. For a residents management company or a right to manage company taking it on for the first time, the useful starting point is not a quote but a short list of questions the lease has already answered.
What the lease requires, before what the market offers
Leases specify who insures, what perils must be covered, whose interest must be noted and how the premium is recovered. Some require particular perils by name. Some require the freeholder's interest to be noted, or a mortgagee's. Buying a policy that is cheaper and narrower than the lease demands puts the person who arranged it in breach, so the lease is the specification and the market is only the source.
The sum insured, and why a valuation is not optional
The rebuild cost of a block is not a figure anybody can sensibly estimate from the outside. It includes demolition, site clearance, professional fees, common parts, lifts, pumps, tanks, and the cost of complying with current building regulations rather than with whatever was legal when the block went up. A professional reinstatement cost assessment, refreshed periodically and index linked in between, is the only defensible way to set it.
The cover a block needs beyond the structure
Property owners liability for the common parts. Employers liability where the block employs a caretaker or cleaner, which is compulsory. Loss of rent or alternative accommodation where flats become uninhabitable. Terrorism, which lenders increasingly expect. Engineering inspection for lifts, which is a statutory inspection regime rather than an insurance option. Directors and officers cover for the volunteers running a resident management company, which protects them personally.
What leaseholders are entitled to see
Leaseholders may request a summary of the insurance cover and inspect the policy and the supporting documents, and they may challenge a service charge that is unreasonable. Commission paid to managing agents and brokers on block policies has been under regulatory scrutiny and is expected to be disclosed. A committee that publishes the policy summary and the premium breakdown to residents forestalls most of the arguments.
Questions people ask about block of flats insurance
Who is responsible for insuring a block of flats?
Whoever the lease names, usually the freeholder or a management company acting for them. In a share of freehold or right to manage block, the leaseholders' own company does it.
Can leaseholders see the policy?
Yes. Leaseholders have statutory rights to a summary of the cover and to inspect the policy and supporting documents. A committee that circulates it annually avoids most disputes.
How often should the sum insured be revalued?
A professional reinstatement assessment every few years, with index linking in between. Blocks are underinsured more often than houses because nobody revisits the figure.
Does the block policy cover my flat's contents?
No. Contents are the leaseholder's, and so is the line the lease draws around fixtures and improvements. Read the demise clause to see where the block policy stops.